3 Problems to Avoid When Shopping for a Rental Real Estate

by | BiggerPockets.com|Repost by Ali Safavi

The following are three problems I try to avoid when I look for a rental property. This isn’t to say I will never touch a property that has one of these issues, but there better be a really good reason for it, and I would have to factor it into my numbers.

3 Problems I Avoid When Shopping for a Rental Property

1. Neighborhood

You cannot easily fix a neighborhood. Sure, you could join the local city council and start a neighborhood watch, but the neighborhood is not likely going to change because you want it to. Therefore, I don’t want to buy a property where the neighborhood will always be an unsolvable problem.

Related: How to Weed Out the Top Tier Tenants From the Rental Destroyers

The property will continually be difficult to rent, the tenants will trash the house, I’ll have to deal with evictions and late rent, and in the end, the property’s value may never increase (and might actually decrease). I’m not saying I will only buy in a Class A neighborhood, but I’m definitely not going to buy in a Class D area.

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2. Foundation Issues

Foundation issues scare me because they can be a money pit to fix, and the cost of a solution can sometimes eclipse six figures. This is especially true with foundation issues on a house with a basement or slab. I would also put any property that has water leaking in the foundation in this problem category and steer clear. Yes, there are investors who specialize in properties that have bad foundations, but for me, the risk is too great.

3. Shared Driveways

I once bought a nice house in a nice area that shared a driveway with a neighbor’s house. Literally, the two houses were 20 feet apart with the driveway in between, split evenly down the middle into “their side” and “my side.” When I bought the house, I didn’t see any issues with this situation, but within a few months I learned a terrible truth: the neighbor was a driveway hoarder.

He started to pile up garbage, boats, engines, tires, and everything else you could imagine in the driveway. Although he was polite enough to keep his junk on his side of the shared driveway, it made my property look incredibly bad, and we had a terrible time trying to rent or sell it. The junk in the neighbor’s driveway reduced the value of my property by 20%, and there was nothing I could do about it. Now I don’t buy properties where the neighbor could so easily affect my bottom line.

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Related: The 5 Most Common Reasons Tenants Leave Your Rentals

In addition to these three, there are other location-specific problems, such as being directly below a flight path or next door to loud/angry dogs. Likely, you’ll have your own list of “won’t touch” property features, and that’s OK. Success is found more often in what you say “no” to than what you say “yes” to. You don’t need to try to fix every deal you find. As the saying goes, “One man’s junk is another man’s treasure.”

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